We measure certain financial assets and liabilities at fair value on a recurring basis, including financial instruments owned, available-for-sale securities, investments, financial instruments sold, but not yet purchased, and derivatives.

We generally utilize third-party pricing services to value Level 1 and Level 2 available-for-sale investment securities, as well as certain derivatives designated as cash flow hedges. We review the methodologies and assumptions used by the third-party pricing services and evaluate the values provided, principally by comparison with other available market quotes for similar instruments and/or analysis based on internal models using available third-party market data. We may occasionally adjust certain values provided by the third-party pricing service when we believe, as the result of our review, that the adjusted price most appropriately reflects the fair value of the particular security.

Following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value. The descriptions include an indication of the level of the fair value hierarchy in which the assets or liabilities are classified.

When available, the fair value of financial instruments is based on quoted prices in active markets and reported in Level 1. Level 1 financial instruments include highly liquid instruments with quoted prices, such as equity securities listed in active markets, corporate fixed income securities, and U.S. government securities.

If quoted prices are not available for identical instruments, fair values are obtained from pricing services, broker quotes, or other model-based valuation techniques with observable inputs, such as the present value of estimated cash flows, and reported as Level 2. The nature of these financial instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Level 2 financial instruments include U.S. government agency securities, mortgage-backed securities, corporate fixed income and equity securities infrequently traded, state and municipal securities, sovereign debt, and asset-backed securities, which primarily include collateralized loan obligations.

We have identified Level 3 financial instruments to include certain asset-backed securities and loans with unobservable pricing inputs. Level 3 financial instruments have little to no pricing observability as of the report date. These financial instruments do not have active two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Investments carried at fair value primarily include corporate equity securities, auction-rate securities (“ARS”), and private company investments.

Corporate equity securities are primarily valued based on quoted prices in active markets and reported in Level 1.

ARS are primarily valued based upon our expectations of issuer redemptions and using internal discounted cash flow models that utilize unobservable inputs. ARS are primarily reported as Level 3 assets.

Investments at fair value include investments in funds, including certain money market funds that are measured at net asset value (“NAV”). The Company uses NAV to measure the fair value of its fund investments when (i) the fund investment does not have a readily determinable fair value and (ii) the NAV of the investment fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the underlying investments at fair value.

The Company’s investments in funds measured at NAV include partnership interests, mutual funds, private equity funds, and money market funds. Private equity funds primarily invest in a broad range of industries worldwide in a variety of situations, including leveraged buyouts, recapitalizations, growth investments and distressed investments. The private equity funds are primarily closed-end funds in which the Company’s investments are generally not eligible for redemption. Distributions will be received from these funds as the underlying assets are liquidated or distributed.

The general and limited partnership interests in investment partnerships were primarily valued based upon NAVs received from third-party fund managers. The various partnerships are investment companies, which record their underlying investments at fair value based on fair value policies established by management of the underlying fund. Fair value policies at the underlying fund generally require the funds to utilize pricing/valuation information, including independent appraisals, from third-party sources. However, in some instances, current valuation information for illiquid securities or securities in markets that are not active may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable. In these instances, fund management may perform model-based analytical valuations that may be used as an input to value these investments.

The table below presents the fair value of our investments in, and unfunded commitments to, funds that are measured at NAV as of March 31, 2020 and December 31, 2019 (in thousands):

Financial instruments sold, but not purchased, recorded at fair value based on quoted prices in active markets and other observable market data include highly liquid instruments with quoted prices, such as U.S. government securities, equity and fixed income securities listed in active markets, which are reported as Level 1.

If quoted prices are not available, fair values are obtained from pricing services, broker quotes, or other model-based valuation techniques with observable inputs, such as the present value of estimated cash flows, and reported as Level 2. The nature of these financial instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Level 2 financial instruments include U.S. government agency securities, agency mortgage-backed securities not actively traded, corporate fixed income, sovereign debt securities, and state and municipal securities.

Derivatives are valued using quoted market prices for identical instruments when available or pricing models based on the net present value of estimated future cash flows. The valuation models used require market observable inputs, including contractual terms, market prices, yield curves, credit curves, and measures of volatility. We manage credit risk for our derivative positions on a counterparty-by-counterparty basis and calculate credit valuation adjustments, included in the fair value of these instruments, on the basis of our relationships at the counterparty portfolio/master netting agreement level. These credit valuation adjustments are determined by applying a credit spread for the counterparty to the total expected exposure of the derivative after considering collateral and other master netting arrangements. We have classified our interest rate swaps as Level 2.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2020, are presented below (in thousands):

	March 31, 2020
	Total		Level 1		Level 2		Level 3
Financial instruments owned:
U.S. government securities	$	12,821	$	12,821	$	—	$	—
U.S. government agency securities		80,138		—		80,138		—
Mortgage-backed securities:
Agency		371,762		—		371,762		—
Non-agency		2,870		—		2,870		—
Asset-backed securities		12,942		—		12,767		175
Corporate securities:
Fixed income securities		275,663		7,850		267,813		—
Equity securities		69,259		64,203		5,056		—
Sovereign debt		21,057		—		21,057		—
State and municipal securities		75,740		—		75,740		—
Loans		10,259		—		—		10,259
Total financial instruments owned		932,511		84,874		837,203		10,434
Available-for-sale securities:
U.S. government agency securities		5,650		—		5,650		—
State and municipal securities		17,142		—		17,142		—
Mortgage-backed securities:
Agency		829,433		—		829,433		—
Commercial		108,186		—		108,186		—
Non-agency		8,644		—		8,644		—
Corporate fixed income securities		727,590		—		727,590		—
Asset-backed securities		1,669,445		—		1,669,445		—
Total available-for-sale securities		3,366,090		—		3,366,090		—
Investments:
Corporate equity securities		14,898		13,838		—		1,060
Auction rate securities:
Equity securities		14,243		—		—		14,243
Municipal securities		183		—		—		183
Other		16,119		9,362		5,924		833
Investments in funds and partnerships measured at NAV		10,245
Total investments		55,688		23,200		5,924		16,319
Cash equivalents measured at NAV		26,567
	$	4,380,856	$	108,074	$	4,209,217	$	26,753

	March 31, 2020
	Total		Level 1		Level 2		Level 3
Liabilities:
Financial instruments sold, but not yet purchased:
U.S. government securities	$	239,311	$	239,311	$	—	$	—
U.S. government agency securities		16,320		—		16,320		—
Agency mortgage-backed securities		179,407		—		179,407		—
Corporate securities:
Fixed income securities		192,603		3,882		188,721		—
Equity securities		22,776		22,776		—		—
Sovereign debt		18,178		—		18,178		—
State and municipal securities		200		—		200		—
Total financial instruments sold, but not yet purchased		668,795		265,969		402,826		—
Derivative contracts ⁽¹⁾		1,262		—		1,262		—
	$	670,057	$	265,969	$	404,088	$	—

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2019, are presented below (in thousands):

	December 31, 2019
	Total		Level 1		Level 2		Level 3
Financial instruments owned:
U.S. government securities	$	9,266	$	9,266	$	—	$	—
U.S. government agency securities		66,881		—		66,881		—
Mortgage-backed securities:
Agency		388,856		—		388,856		—
Non-agency		5,155		—		5,155		—
Asset-backed securities		28,385		—		28,210		175
Corporate securities:
Fixed income securities		250,783		872		249,911		—
Equity securities		64,009		61,579		2,430		—
Sovereign debt		12,403		—		12,403		—
State and municipal securities		137,211		—		137,211		—
Loans		9,983		—		832		9,151
Total financial instruments owned		972,932		71,717		891,889		9,326
Available-for-sale securities:
U.S. government agency securities		5,067		—		5,067		—
State and municipal securities		24,297		—		24,297		—
Mortgage-backed securities:
Agency		837,878		—		837,878		—
Commercial		109,537		—		109,537		—
Non-agency		9,758		—		9,758		—
Corporate fixed income securities		675,311		—		675,311		—
Asset-backed securities		1,592,889		—		1,592,889		—
Total available-for-sale securities		3,254,737		—		3,254,737		—
Investments:
Corporate equity securities		35,083		34,023		—		1,060
Auction rate securities:
Equity securities		14,243		—		—		14,243
Municipal securities		654		—		470		184
Other		16,771		9,905		6,013		853
Investments in funds and partnerships measured at NAV		13,221
Total investments		79,972		43,928		6,483		16,340
Cash equivalents measured at NAV		25,734
Derivative contracts ⁽¹⁾		1,086		—		1,086		—
	$	4,334,461	$	115,645	$	4,154,195	$	25,666

	December 31, 2019
	Total		Level 1		Level 2		Level 3
Liabilities:
Financial instruments sold, but not yet purchased:
U.S. government securities	$	243,570	$	243,570	$	—	$	—
U.S. government agency securities		1,000		—		1,000		—
Agency mortgage-backed securities		231,909		—		231,909		—
Corporate securities:
Fixed income securities		140,100		633		139,467		—
Equity securities		32,047		32,047		—		—
Sovereign debt		13,271		—		13,271		—
Loans		955		—		—		955
Total financial instruments sold, but not yet purchased	$	662,852	$	276,250	$	385,647	$	955

The following table summarizes the changes in fair value associated with Level 3 financial instruments during the three months ended March 31, 2020 (in thousands):

	Three Months Ended March 31, 2020
	Financial instruments owned					Investments
	Asset-Backed Securities		Loans			Corporate Equity Securities		Auction Rate Securities – Equity		Auction Rate Securities – Municipal			Other
Balance at December 31, 2019	$	175	$	9,151		$	1,060	$	14,243	$	184		$	853
Unrealized losses		—		(2,827	)		—		—		(1	)		—
Purchases		—		6,942			—		—		—			—
Sales		—		(3,004	)		—		—		—			(20	)
Redemptions		—		(3	)		—		—		—			—
Net change		—		1,108			—		—		(1	)		(20	)
Balance at March 31, 2020	$	175	$	10,259		$	1,060	$	14,243	$	183		$	833

The change in fair value associated with Level 3 financial instruments sold, but not yet purchased during the three months ended March 31, 2020 is attributable to purchases, partially offset by unrealized losses and sales.

The results included in the table above are only a component of the overall investment strategies of our company. The table above does not present Level 1 or Level 2 valued assets or liabilities. The changes in unrealized gains/(losses) recorded in earnings for the three months ended March 31, 2020, relating to Level 3 assets still held at March 31, 2020, were immaterial.

The fair value of certain Level 3 assets was determined using various methodologies, as appropriate, including third-party pricing vendors and broker quotes. These inputs are evaluated for reasonableness through various procedures, including due diligence reviews of third-party pricing vendors, variance analyses, consideration of current market environment, and other analytical procedures.

The fair value for our auction rate securities was determined using an income approach based on an internally developed discounted cash flow model. The discounted cash flow model utilizes two significant unobservable inputs: discount rate and workout period. Significant increases in any of these inputs in isolation would result in a significantly lower fair value. On an ongoing basis, management verifies the fair value by reviewing the appropriateness of the discounted cash flow model and its significant inputs.

The following reflects the fair value of financial instruments as of March 31, 2020 and December 31, 2019, whether or not recognized in the consolidated statements of financial condition at fair value (in thousands).

	March 31, 2020				December 31, 2019
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	1,382,920	$	1,382,920	$	1,142,596	$	1,142,596
Cash segregated for regulatory purposes		196,950		196,950		131,374		131,374
Securities purchased under agreements to resell		458,968		458,968		385,008		385,008
Financial instruments owned		932,511		932,511		972,932		972,932
Available-for-sale securities		3,366,090		3,366,090		3,254,737		3,254,737
Held-to-maturity securities		3,085,824		2,697,830		2,856,219		2,827,883
Bank loans		9,994,500		10,017,518		9,624,042		9,801,986
Loans held for sale		570,787		570,787		389,693		389,693
Investments		55,688		55,688		79,972		79,972
Derivative contracts ⁽¹⁾		—		—		1,086		1,086
Financial liabilities:
Securities sold under agreements to repurchase	$	475,528	$	475,528	$	391,634	$	391,634
Bank deposits		16,880,933		16,076,448		15,332,581		14,467,894
Financial instruments sold, but not yet purchased		668,795		668,795		662,852		662,852
Federal Home Loan Bank advances		250,000		250,000		250,000		250,000
Borrowings		198,150		198,150		150		150
Senior notes		1,017,269		1,016,578		1,017,010		1,069,425
Debentures to Stifel Financial Capital Trusts		60,000		37,860		60,000		45,847
Derivative contracts ⁽²⁾		1,262		1,262		—		—

The following tables present the estimated fair values of financial instruments not measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 (in thousands):

	March 31, 2020
	Total		Level 1		Level 2		Level 3
Financial assets:
Cash	$	1,356,353	$	1,356,353	$	—	$	—
Cash segregated for regulatory purposes		196,950		196,950		—		—
Securities purchased under agreements to resell		458,968		431,737		27,231		—
Held-to-maturity securities		2,697,830		—		2,584,305		113,525
Bank loans		10,017,518		—		10,017,518		—
Loans held for sale		570,787		—		570,787		—
Financial liabilities:
Securities sold under agreements to repurchase	$	475,528	$	—	$	475,528	$	—
Bank deposits		16,076,448		—		16,076,448		—
Federal Home Loan Bank advances		250,000		250,000		—		—
Borrowings		198,150		198,150		—		—
Senior notes		1,016,578		1,016,578		—		—
Debentures to Stifel Financial Capital Trusts		37,860		—		—		37,860

	December 31, 2019
	Total		Level 1		Level 2		Level 3
Financial assets:
Cash	$	1,116,862	$	1,116,862	$	—	$	—
Cash segregated for regulatory purposes		131,374		131,374		—		—
Securities purchased under agreements to resell		385,008		342,132		42,876		—
Held-to-maturity securities		2,827,883		—		2,666,773		161,110
Bank loans		9,801,986		—		9,801,986		—
Loans held for sale		389,693		—		389,693		—
Financial liabilities:
Securities sold under agreements to repurchase	$	391,634	$	22,205	$	369,429	$	—
Bank deposits		14,467,894		—		14,467,894		—
Federal Home Loan Bank advances		250,000		250,000		—		—
Borrowings		150		150		—		—
Senior notes		1,069,425		1,069,425		—		—
Debentures to Stifel Financial Capital Trusts		45,847		—		—		45,847

The following, as supplemented by the discussion above, describes the valuation techniques used in estimating the fair value of our financial instruments as of March 31, 2020 and December 31, 2019.

Securities purchased under agreements to resell are collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The carrying values at March 31, 2020 and December 31, 2019 approximate fair value due to their short-term nature.

Securities held to maturity are recorded at amortized cost based on our company’s positive intent and ability to hold these securities to maturity. Securities held to maturity include agency mortgage-backed securities, asset-backed securities, consisting of collateralized loan obligation securities and corporate fixed income securities. The estimated fair value, included in the above table, is determined using several factors; however, primary weight is given to discounted cash flow modeling techniques that incorporated an estimated discount rate based upon recent observable debt security issuances with similar characteristics.

Loans held for sale consist of fixed-rate and adjustable-rate residential real estate mortgage loans intended for sale. Loans held for sale are stated at lower of cost or market value. Market value is determined based on prevailing market prices for loans with similar characteristics or on sale contract prices.

The fair values of mortgage loans and commercial loans were estimated using a discounted cash flow method, a form of the income approach. Discount rates were determined considering rates at which similar portfolios of loans, with similar remaining maturities, would be made and considering liquidity spreads applicable to each loan portfolio based on the secondary market.

Securities sold under agreements to repurchase are collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The carrying values at March 31, 2020 and December 31, 2019 approximate fair value due to the short-term nature.

The fair value of interest-bearing deposits, including certificates of deposits, demand deposits, savings, and checking accounts, was calculated by discounting the future cash flows using discount rates based on the replacement cost of funding of similar structures and terms.

FHLB advances reflect terms that approximate current market rates for similar borrowings.

The carrying amount of borrowings approximates fair value due to the relative short-term nature of such borrowings.

The fair value of our senior notes is estimated based upon quoted market prices.

The fair value of our trust preferred securities is based on the discounted value of contractual cash flows. We have assumed a discount rate based on similar type debt instruments.

These fair value disclosures represent our best estimates based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding future expected losses, current economic conditions, risk characteristics of the various instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in the above methodologies and assumptions could significantly affect the estimates.